A trustee for Tops Markets LLC creditors filed a $375 million lawsuit against private-equity backer Morgan Stanley Investment Management and other former owners, alleging they took hundreds of millions of dollars in illegal dividends that drove the grocery chain into bankruptcy in 2018, the Wall Street Journal reported. The company took on so much debt to finance four separate dividends between 2009 and 2013 that it couldn’t fund its obligations under two underfunded union pension plans, according to the lawsuit filed Wednesday in the U.S. Bankruptcy Court in White Plains, N.Y. Tops Markets, an upstate New York grocery chain, filed for bankruptcy in February 2018. The Williamsville, N.Y., chain emerged from bankruptcy the same year, leaving behind two pension plans with hundreds of millions of dollars of unfunded liabilities. Alan Halperin, a trustee appointed in the Tops bankruptcy case to pursue claims against the company’s private-equity owners, filed the lawsuit on behalf of creditors, including workers and retirees under the pension plans.
